by • January 30, 2015 • UncategorizedComments (7)197

The gambler’s stack

I was stressed out, obviously. Some meeting had gone badly or our stats weren’t good enough. The guy I was talking to had been a professional gambler before getting into startups (less volatile, he said). He told me something that stuck:

> You’re gonna go crazy if you count your stack every day.

What he meant is that a day isn’t enough time to see a real correlation between what you’re doing and the results you’re getting. There’s too much variance. You can play well and do poorly, or vice versa. If you look at the results too often, you’re eventually going to let the outliers talk you out of playing the way you know you ought to play.

Let’s say you get slaughtered in an investment pitch. Maybe your company sucks, or maybe the investor was having a bad day or is just a grump. Results like this can spook you. But one meeting isn’t enough to know. Better to emotionally file away the results and review them after a couple weeks when you’ve got a bit more data to work with.

You can get fooled by the positive outliers, too. Finding one incredibly enthusiastic customer does not necessarily imply that you’ve nailed it (though it’s certainly a step in the right direction).

You want to tally your winnings (and losses) every so often, of course. That’s how we learn. In the poker world, that was every week or two. Just maybe give yourself permission not to get so stressed out by the ups and downs in between.

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7 Responses to The gambler’s stack

  1. Really like this post Rob. I’ve found it incredibly easy to slip into a mindset where I worry an entire morning about an area of our startup based on what’s effectively a single datapoint. I’ll try to catch myself next time by thinking of the gambler’s stack!

    Other question, every considered adding Disqus to your blog?

  2. This is pretty much what Nassim Taleb said in his book Black Swan (might have been Fooled by Randomness). It doesn’t make sense to keep an eye on the stock market every day due to variance. Instead you should wait for things to even out. Less noise.

    There’s a lot to learn from his thoughts about outliers. Those are some good books to read.

    • robfitz says:

      Totally agreed. All 3 are amazing. Bed of Procrustes (his little book of thoughts and aphorisms) is also great fun if you enjoy his worldview and way of writing. I can imagine it rubbing some people the wrong way, but for me it hits the spot :)

  3. Jeff Madsen says:

    Great post, Rob! I know I’m currently working to get out the door, but all my focus was on counting email subscribers, Google Analytics page views – hovering over every new tick and statistic & worrying that they weren’t coming in fast enough and none of this was going to be worth it.

    Since putting that all aside I’ve made great strides in pushing forward and am getting close to release, thankfully!

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